MILK
There was no lack of volatility in Class III futures today. It was unexpected that barrel cheese would see the strength it did pushing it well above $2.00 nor was weakness expected in blocks. The large divergence caused initial confusion after blocks began to decline after first increasing. This triggered aggressive selling as traders who were long in the market felt uneasy and liquidated their positions. The uncertainty resulted in a price swing of $0.83 in the June contract and a $0.66 price swing in the July contract. This sets the stage for greater volatility as the week and the year progresses. This is only May with more than half of the year ahead. There has not been a fundamental change from yesterday or last week, but mainly in market perception. The June Class III contract quickly retreated below $21.00 with July falling below $20.00.
The government announced it will provide nearly $200 million to fight the spread of the H5N1 virus among dairy cows. The measures include providing personal protective equipment for workers, with financial support for affected sites that participate in a study by the USDA and the Centers for Disease Control and Prevention (CDC). Financial assistance includes up to $2,000 per month for sites providing personal protective equipment, $1,500 for developing biosecurity plans, and $100 for producers using an in-line sampler in their milk systems. As much as $2,000 per month will be available for safe milk disposal and up to $10,000 will cover increased veterinarian costs. USDA will cover the cost of shipping samples for testing to the National Veterinary Services Laboratories, with a cap of $50 per shipment for two shipments per month. This support could total $28,000 per location over the next 120 days. There is also up to $98 million in funds from the Animal and Plant Health Inspection Service earmarked to compensate for lost milk production and to manage the movement of lactating cattle.
AVERAGE CLASS III PRICES
| 3 Month: | $19.81 |
| 6 Month: | $19.61 |
| 9 Month: | $19.30 |
| 12 Month: | $19.04 |
CHEESE
Barrel cheese price moved to the highest level since November 11, 2022. Price has moved contra seasonally, which could indicate further strength as the year progresses. However, there is concern that cheese prices may have moved upward too fast. Once the buying frenzy is satisfied, the price may be higher than the fundamentals will support. It certainly would be welcomed by farmers and those who work with farmers. The year may be much better than anticipated and exceed USDA's expectations.
BUTTER
Butter price may chop around the $3.00 level as business is done. Cream is available for churning. Churning is active as plants want to utilize the cream supply to build inventory for third and fourth-quarter demand. Active contracting occurs as buyers want to ensure supply for later demand. This should keep the price supported.
OUTSIDE MARKETS SUMMARY
July corn closed down 5.00 cents per bushel at $4.6750, July soybeans closed down 5.00 cents at $12.1450 and July soybean meal closed up $6.80 per ton at $373.30. July Chicago wheat closed down 14.50 cents at $6.7250. June live cattle closed up $2.60 at $178.18. June crude oil is down $1.10 per barrel at $78.02. The Dow Jones Industrial Average is up 127 points at 39,558 with the NASDAQ up 123 points at 16,511.
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